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Innovation Puts Chains Ahead of the Curve

Innovating is the key to success in the restaurant industry; the trick is staying unique in a me-too market.

By Lisa Bertagnoli, Contributing Editor -- Chain Leader, 5/1/2008

As they eat and drink, uWink customers can play games with their tablemates, people sitting across the restaurant or, as the chain expands, guests in another city. 


For a full profile of the innovative and interactive uWink concept, visit uWink Ready to Expand.
Curbside pickup. Online ordering. Cell-phone coupons. Interactive Web sites. All these have been successful innovations at chain restaurants—and you can tell even without looking at the sales figures behind them.

How? The copycat factor. All four innovations, rolled in the last two years or so, are on the brink of being commonplace in the industry.

As will, we predict, the innovations we've gathered for this story. Whether they're new menu items, service enhancements or online offerings, all innovations serve the same purpose: to bond customers closer to the brand. That bonding is essential not only in this slack economy, but to keep a brand a growing concern.

“Every brand has to keep ahead of the competition by continually recreating those points of difference,” says Frank Steed, president and chief executive officer of The Steed Consultancy, a chain-restaurant consulting firm based in Kerens, Texas. “With the wealth of talent and the speed of the Internet, everybody's ability to copy is split second.”

The best innovations, he says, occur on multiple levels: One example is T.G.I. Friday's “Ultimate Recipe Showdown,” a Food Network series in which avid home cooks compete for a $25,000 prize and a chance for their recipe to be featured on Friday's menu. “They've done something innovative that has lots of angles,” Steed says. “The jury is out on whether it will drive business, but it's impressive to me.”

CiCi's “wow bell” alerts staff to the presence of a first-time customer. The chain has incorporated “wow” into its training materials and the Wowapalooza, a road show designed to rev up managers.
A New Spin

While inevitable, the copycat factor does raise the innovation bar, says Craig Moore, president and CEO of Coppell, Texas-based CiCi's Pizza. “Things are changing so fast that if you're not on the cutting edge of dining out, you'll be an also-ran pretty quickly,” Moore says.

But, he adds, innovation doesn't necessarily mean change. “We're still training people, just training them a different way,” he says, referring to CiCi's use of videos and its executive road show, dubbed Wowapalooza. “That's just a different way of doing the same thing.”

That, essentially, is the thought behind uWink, a soon-to-be three-unit casual-dining chain in Los Angeles. The brains behind uWink is Nolan Bushnell, founder of Atari and Chuck E. Cheese.

The innovation at the 150-seat restaurant is the technology platform driving the entire operation. Customers order food and pay for it via tabletop computers. Servers act as “entertainment concierges,” key because as they dine, customers are likely using tabletop computers to play games with dinner companions, customers at a table across the room or, as more uWinks open, customers in other cities.

The technology allows the manager to change uWink's environment as the demographic changes: softer music and more light for family time, louder music and racier games for later in the evening.

“We spent years building the platform,” says Chief Technology Officer Brent Bushnell, who is Nolan Bushnell's son. He is so confident that uWink occupies a unique niche that he plans to sell the technology to other restaurant concepts.

As for the name? “We wanted a word that was short and fun and flirty,” Brent Bushnell says. “The 'u' stands for putting you in control, and the wink is a fun social gesture.”

Customers in Control

Indeed, customer control is the theme of recent menu innovations—the easiest way to show customers that the idea machine is running.

One example: Boston-based Au Bon Pain's Portions line of 14 dishes, all with 200 or fewer calories. Portions, which accounted for as much as 5 percent of sales in test, was introduced to all 200 bakery-cafes by the end of March. Portions are priced at $2.99 for meatless dishes like chickpea-tomato salad and $3.49 for meat dishes such as Mediterranean tuna salad.

The Portions are not smaller versions of current menu items. “To give variety and change to the guest was essential,” says President Sue Morelli. The items were created from existing ingredients to make them economically feasible.

“A lot of people are having fun with them,” Morelli says. Customers mix and match Portions for lunch, buy one to augment a sandwich or salad, or buy several to eat as a midafternoon snack.

Quiznos’ Sammies, priced at $2, enable customers to work the menu their way. "We’re definitely seeing that midafternoon snack occasion," says Zach Calkins, vice president of culinary development.
Small Package, Big Flavors

Denver-based Quiznos is also reaching customers with a smaller product and new flavor profile. Sammies, a line of four flatbread sandwiches priced at $2 each, rolled nationwide in November. During the high point of the promotion, they accounted for 26 percent of sales and have settled in at a healthy 16 percent, says Zach Calkins, vice president of culinary development for the 4,500-unit chain.

Calkins has noticed that the sandwiches are attracting new and core customers, and opening up a new daypart for the chain, but he can't quantify it. “We're definitely seeing that midafternoon snack occasion,” he says.

Calkins says the timing of the low-priced sandwiches was prescient. “Going into it, we got a feeling…everybody knew the economy was going south,” he says.

The chain is preparing to introduce more Sammies, including a balsamic beef, chicken with honey-bourbon sauce, and a steak with habanero- and chipotle-spiked sauce in May. “These aren't common flavors,” Calkins says. “They're bold.”

Bold works for drinks, too. Tropical Smoothie Café, a Destin, Fla.-based chain of 270 smoothie stores, launched a line of six Supercharged smoothies in February. They now account for 25 percent of sales systemwide.

Tropical Smoothie's Supercharged smoothies, made with nutrient-laden “superfruits,” account for 25 percent of sales—50 percent in some stores.
The Supercharged smoothies feature pomegranate, acai berries and goji, so-called “superfruits” because they contain an intense concentration of antioxidants and vitamins. Customers like the drinks because the nutrients are already there; no need to pick and choose from a mind-boggling array of supplements, says Barbara Valentino, director of marketing and communications for the chain.

A 7-foot store banner touting the smoothies aids the choice process even more. “Customers point to it and say, 'I want one of those,'” Valentino says.

A Ringing Endorsement

That's one hallmark of innovation: making life easier for customers. And that's the idea behind the innovations at 640-unit CiCi's Pizza. The innovations include a special-request pizza: Staff will make whatever pizza guests ask for, even if it's not on the buffet line.

CiCi's newest innovation is the “wow bell.” When guests come in, servers ask if it's their first time at the chain. If the answer is yes, they ring a small bell.

“It's not to make a scene, but to tell employees we have someone who's never been here before,” says Moore of the wow bell. “We want all the employees' heads to jerk—this person needs to be treated specially.”

Company executives introduced the wow bell to restaurant employees with a video clip, a humorous takeoff of the “Saturday Night Live” classic cowbell sketch. “Instead of cowbell, it's wow bell,” Moore explains.

Service innovations are crucial as the chain tries to hold on to its budget position, no small matter as commodity prices skyrocket.

Shakey’s electronic table locator helps servers find guests’ tables faster. That means the pizza arrives hotter, and there’s more time for guest-server interaction.

No More Hiding

Alhambra, Calif.-based Shakey's isn't a buffet; customers order pizza, then sit down to wait for it. The chain is experimenting with an electronic table locator to help staff land hot pizza on tables more quickly.

The chain's manual system—customers put a number in a holder on their table—sometimes didn't work, says Rebecca Black, senior director of operations for the 50-unit chain. The confusion “hurt service time,” she says.

The electronic system requires guests to put a small key into a device on the table; the device tells the expeditor where the guest is sitting. The device also helps the chain keep track of ticket times and improve them if need be. The locator system was tested in a franchise location in Auburn, Ala., and will be included in all new stores, Black says.

The cost, between $7,000 for smaller stores and $10,000 for bigger locations, is worth it, Black adds. “You know how long every single order takes,” she says. Plus, with the economy slumping, “if you can do fast casual and also have speed of service, there's a win-win situation,” she says.

Results Not Necessary

Sometimes innovating means working in the dark, with no clear results in mind. That's the situation at Extreme Pita, the Ontario, Canada-based chain of 230 sandwich shops. Whether or not customers ask for it, receipts in the chain's Arizona locations show the fat, calorie and carb content of their orders, plus a fun nutritional fact about Extreme Pita's menu.

Extreme Pita’s receipts show calorie, fat and carb content of the meals. The receipts, scheduled to roll out systemwide this year, "reaffirm our position as a healthy QSR," says Alex Rechichi, co-founder and president.

The receipt is more a marketing gambit than an educational one. “What we're really looking for is to make that connection with customers,” say Alex Rechichi, co-founder and president of the quick-service chain. As a chain that touts a healthful, fresh menu, “it's important for us to provide [nutritional] information and not hide anything from customers,” he says.

The software costs about $1,500 to install and bears a monthly service charge of about $200. Is it worth it? Rechichi has no idea—at least not yet. When the software rolls out systemwide next year, Extreme Pita will offer a coupon on each receipt, and then measure the return. In test, such coupons yielded an 8 percent to 12 percent return rate, Rechichi says.

Like Extreme Pita, Chicago-based Stir Crazy is rolling an innovation without being sure of the results. In March, the chain began offering Cook Like a Wok Star classes at all 12 locations.

The $40, two-and-a-half-hour classes include instructions on how to prepare three dishes, a dinner of those three dishes (prepared by staff, not students) and two glasses of wine.

The classes are selling out, says President and Chief Operating Officer Greg Carey, and are probably creating repeat customers. “Once you've created a food and wine link to a guest, I can't imagine them not wanting to come in and share the whole offering,” he says.

As Seen on the Internet

The next best thing to being there isn't the telephone; it's the Internet. No serious restaurant company is without a Web site these days, and the more serious ones are branching into sites that allow customers to virtually interact with each other.

Krystal, the Chattanooga, Tenn.-based burger chain, morphed its popular Krystal Lovers Lounge, an interactive part of its krystal.com Web site, into a younger-skewed, YouTube-like Web presence. Called bigredcouch.com, the site invites viewers to share personal videos.

“One thing we wanted to do: It didn't have to be about Krystal,” says Brad Wahl, vice president of marketing for the 400-unit quick-service concept.

Wahl says it's difficult to tie bigredcouch.com to any sales increases. Still, he believes that Krystal's Internet marketing efforts are partly responsible for the chain's record-breaking sales in 2007; Krystal does not release sales figures.

It's also responsible for gathering customer feedback that has spurred menu innovations. One example: Krystal stopped serving a milk shake about 10 years ago, but brought it back, in the form of a MilkQuake, last May. Billed as The Milkshake That Rocks, the drink “is quirky-corny marketing stuff, but it's what customers want,” Wahl says.

Krystal spends less than 10 percent of its marketing budget on Internet efforts. “TV is still king in driving short-term results,” Wahl says. “Online is a commitment to an ongoing conversation with the customer.” Wahl calls the Web a two-way street compared to traditional media, “where we market to the consumer, and it's a one-way street.”

And that, in a nutshell, is the future of innovation: letting customers have a say in how they're marketed to, what they buy, and how they experience a brand and its menu.

“Innovating is not an option,” Wahl says. “If we're going to survive, we need to be innovative. If we're not thinking of the next thing, we won't be that unique brand.”

For a full profile of the innovative and interactive uWink concept, visit http://www.chainleader.com/article/CA6554433.html.



Big Ideas

Chicago-based Potbelly Sandwich Works launched online ordering in late March. Checks are 6 percent higher than in-store orders, and online orders have hiked traffic counts by 4 to 5 percent, says Bryant Keil, chairman and CEO of the 185-unit chain. Keil says the chain chose to run its own online service. "We want to have the data as ours and interact with customers directly," he says.

Memphis, Tenn.-based Lenny’s, a chain of 162 sandwich shops, lets customers relax while staff buses tables. Reason one: A cleaner restaurant. Reason two: The dining room’s ambience isn’t marred by trash cans. Reason three: Busing tables "gives us one more reason to interact with guests," says President Brent Alvord.

Breakfast, offered since Bojangles debuted 30 years ago, accounts for 41 percent of total sales before 11 a.m., "just when the traditional chicken chain is gearing up for lunch," says Eric Newman, executive vice president of the 400-unit chain. Other chains are following suit: McDonald’s and Hardee’s recently announced their rollouts of chicken breakfast sandwiches.

Bahama Breeze’s YouTube vacation contest "is a fun way for consumers to engage with the brand," says Chip Brown, senior vice president of brand marketing for the Orlando, Fla.-based chain of 23 full-service restaurant-bars. Customers submit a two-minute video showing why they need a Caribbean vacation. The grand prize winner will receive a four-night luxury cruise to the Bahamas for six people.

Easy but innovative: Communal tables at the three Vapiano units in the Washington, D.C. area are popular with guests. More important, they add the energetic buzz the fast-casual Italian chain’s becoming known for.

Morton’s The Steakhouse’s Bar 12-21, which offers a small-plates menu, is drawing a younger crowd to the steakhouse, says Tom Baldwin, CEO of the Chicago-based chain. The bar is in place in more than 30 of the chain’s 79 restaurants. Morton’s is also considering "options" for the brand, Baldwin says. "We’re absolutely pleased with the results," he says.

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